To Reduce Poverty in Africa, Charities Must Make Tough Choices

How to End Poverty in Africa charity impact

The following is an interview with our programme coordinators in Uganda, about the tough choices our local branch has had to make as a charity in order to keep fighting poverty in Africa all while keep things afloat.

It's not necessarily about running charities just like businesses but we have to be at least as professional and as efficient as the private sector. Especially when running not-for-profit microfinance programmes, offering no-interest microloans for the poorest.

This is often a key challenge for charities looking for reliable models on how to reduce poverty worldwide.

Running like a business to end poverty?

When dealing with extreme poverty and offering financial solutions to tackle it, the hardest thing is to remember that in order to keep doing so, you need to have a working business model that is financially viable. Once you lose sight of this, you have to close up shop and you can’t help anyone anymore.

African poverty reduction: interview in Uganda
The below is the transcript of our interview with Habitat for Humanity staff in Uganda.

Understanding poverty in Uganda

For anyone who has an understanding of Uganda, there are two worlds. The western part is economically active, they have not suffered a lot in terms of war, so it has been really stable. And it is the exact opposite with the eastern Uganda:

  • Lots of instability
  • Drought
  • War and conflict situations
  • Lots of orphans and abandoned children as a result
  • High HIV/AIDS prevalence

So this is where most of the humanitarian aid is going, looking into how to reduce poverty in Uganda, especially in rural areas.

Stopping the poverty cycle with microfinance

With our housing microfinance programme in Uganda, it’s a business transaction where the families actually come for loans and then repay over time. It’s like creating a spark to spur a local market, treating people respectfully, like free, independent individuals. And then if they want to talk another loan, they come back to us for that and then repay.

These families are totally independent. When they come to us, it’s the same that they would do by walking into a bank. They are dreaming as individuals.

Tell me your hopes and dreams

When you ask them “what do you hope to do after this?”, they will tell you “I hope to plaster my house, I want to do this and that”. With or without Habitat for Humanity, those are their dreams.

Each time I visit these families, I see a part of me in their struggles. I’ve been through it, lived through it. Believe in the investment that you’ve made in them. It’s a story of success.

And now I’m proud that I’m an advocate for people who are actually in the same place in life that I was in. And that for me is a real success story. Going out to those families, listening to their stories, it’s something I identify with. It’s something that I believe in, that they’re actually going to make it.

All over Africa, and in Uganda, there are so many families that are definitely doing something to come out of poverty, working with us to looks of ways to end poverty.

reducing poverty in uganda smile

These families we help are not victims, they’re strong survivors

We definitely need to influence people’s thinking about these families.  We need to let them know that we are talking about giving a hand up and not a handout.

That is what housing microfinance is set to achieve. We know for fact that it works. It’s one of the best ways to stop poverty from spreading further, and to create wealth and opportunity.

Each time I visit these families, I have a lot of respect for them because they could turn out to be anything. The home construction process in Uganda takes a lot of resilience. I do not in any way despise them. I know that a few years down the road I will meet somebody totally different.

It’s the same thing I see in each family that we currently serve. I respect them because it’s not like they are getting handouts. They’re actually blessed to have partners who are supporting their home construction process.

The real story in Africa: don't believe the clichés.

The story in Africa is different than what the news and the clichés tell you. Children in secondary schools in urban areas in Africa have access to the Internet.

They’re on Facebook, on Twitter, they can Google things and explain what is happening in the world and in Africa. Talking about reducing poverty in Africa as a whole is misleading, like saying that the UK and Ukraine are the same. 

We're talking about an entire continent with many countries developing extremely fast, with modern cities and a vibrant start-up scene while other countries are indeed suffering from extreme poverty. And even within these poorer African countries, it's far from being all black and white. 

Monitoring our impact: a key to poverty reduction

It’s one thing for an organisation to say it’s doing something, it’s another to actually go out and see that it’s a reality. We’re at a level where last time we visited those families, they’ve completely moved on today, the situation is just not the same.

That is very encouraging, it gives me pride. It inspires me more in what I do, to look out even more for the families that we support and work with.

In 2005, Habitat Uganda wasn’t doing very well. The international network was on the verge of closing it and in the end about 70-80% of the staff had to be laid off. I was lucky enough to be among the staff that remained.

Habitat for Humanity Uganda micro-loans

One month to turn things around

And so we were given a period of one month to turn the organisation around. The expectation for Habitat for Humanity International to operate in a country is that your repayment rate [for the micro-loans programme enabling people to build their homes] is at 70 or 80%. But we were at 20%.

When that ultimatum came, the staff that remained sat down and said “look, we will either have to turn this around or fail those families we’ll never have any hope of getting into new houses, having a decent life in this country.”

So everyone, whether they were in accounts, programmes, resource development or communications ended up being a loan collector. To actually go out and ensure that families that were being supported paid back the funding that they received.

In that one month we went from a 20% repayment rate for our micro-loans to over 80%.

Running like a business: making charities more efficient

When I go back now to the communities that we’ve been helping and I see that Habitat is still building, not for a hundred families but for thousands of them, it gives me pride. It was worth the steps we could.

When the entire organisation went to collect those repayments, we talked to the local leaders to tell them what was at stake. That if the families we supported did not pay, they would not have Habitat for Humanity to help reduce poverty in Uganda anymore.

So we asked them to walk with us and to support us in ensuring that everyone who was receiving support could pay us back.

How to reduce poverty in Uganda

Making sacrifices to keep serving communities

I think for every success there have to be some sacrifices made. And in this particular situation we sacrificed quite a number of houses for us to be to have Habitat [in Uganda] now.

During that time when we had the MicroBuild revolving fund, one family’s repayment meant a loan for another family. And when one family says they can’t or won’t pay, that means another family can’t get a house.

How the whole process works is that Habitat will give you the loan in the form of construction materials. And so if you fail to pay back, we take back our materials. That means taking back the materials that were put into your house.

During that time, we definitely took back quite a lot of materials. We could not really take back the exact amount we gave because when you take back bricks or iron sheets, you don’t get the same amount of money for it [as when you bought new]. But the message went across.

When we did that, most of the families that we were working with were saying “Habitat is serious now”, you know?

“Look, I do not care about my neighbour.”

One particular gentleman, when we told him the reason why we needed him to repay, when we told him “if you don’t pay back this loan, your neighbour will not have the chance to live in the house that you currently live in. He told us "look, I do not care about my neighbour".

That was something we didn’t want to hear. If you don’t care about your neighbour, then our programme probably isn't for you. If you want to be part of our network and our mission, if you want to receive a loan, you need to care about your neighbour. We rely on people caring about one another to make this work and to offer micro-loans to the next family.

So we took away the materials that had been put into the construction of his house. First and foremost, the community has to buy into what we are doing. The local leadership has to buy into how we run our projects, and with their help we can change things for good.

They help us put pressure on people who do not see the long term goal, and do not see past their own interest.

Building water wells in Uganda

We work with everyone within the community, so long as the need is there.

The leaders of these communities, some of whom are beneficiaries themselves, act as speakers for their community and they have repeatedly told us “Habitat has made a difference in our lives”.  

But beyond this, they say, it’s the way that we connect with them that is very different from the way the banks do. Our approach is humane, and if they ask for more money but can’t get it yet, we do our best to explain why.

And by doing so we want them to understand how our model works and why it’s important that it is financially viable.

Teaching financial literacy

Also, it’s crucial that we help them understand why they shouldn’t receive a loan that they won’t be able to pay back (which would turn us into enemies rather than friends and partners).

They aren’t used to dealing with financial services, so this type of informative, educational approach is extremely important to the population. That's why we offer as well workshops in financial literacy to help them manage their money and loans.

By not yielding to the pressure of loaning them more money, we maintain this friendly, working relationship with the population. It would be a disservice to the families that we serve to do otherwise.

It’s only after they’ve paid back each micro-loan that we can then move onto the next item: whether it’s adding windows, a water well, a secure door, a concrete slab for the floor etc. In Africa, most of the housing works like this, it’s all incremental building. Improving their homes bit by bit.

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